RAN market on fire: Ericsson CEO

• Ericsson’s networks division is reporting tidy growth
• CEO claims market share gains
• Vendor expects RAN market to grow by more than forecasts
• CEO also hints at further M&A action in the enterprise market

Ericsson’s Networks division has had a promising start to the year driven by growth in its radio access networks division and increasing market share, according to the vendor’s CEO Börje Ekholm.

The Swedish giant reported its first quarter financials this week, with revenues flat year-on-year at SEK49.8 billion ($5.89 billion): The vendor noted in its financial report that sales adjusted to account only for comparable business units and disregarding fluctuations in exchange rates were up by 10%. 

Sales at the vendor’s Networks unit, though, were up by 3% to SEK36.3 billion ($4.32 billion), while the rise in ‘adjusted’ terms was 15% year-on-year. The vendor also noted that its networks business is not impacted by the current product shortages in the global semiconductor sector. 

And the radio access network equipment market is expected to grow this year: Research house Dell’Oro expects the value of the market to grow by 3% in 2021 (to just over $36 billion) but Ericsson thinks it could be even bigger.

“We see a very strong market development overall, probably on the more positive side than what Dell’Oro’s forecast is indicating,” said Ekholm during the vendor’s earnings conference call. “What we see driving over our growth primarily, though, is share gains -- we believe we have made substantial gains in market share. That started a few years back and continued during the first quarter. How Dell’Oro might revise the market forecast I really don't know, but I wouldn't be surprised if it's more on the positive side than the negative side,” added the CEO. 

Ericsson is expecting some major network rollouts to give its second quarter network sales a positive bump, but that activity is not in China, where the operators are yet to issue new tenders. “There was a big gear tender last year that we entered into and won an increased market share. The next tender will probably come in the next few months [but] that's a bit unpredictable… we have no insight into how that would look like,” said the CEO, though he would not be drawn on whether he expected Ericsson to be penalized and have its share of the next 5G RAN rollout business cut back as retaliation for Huawei being excluded from Sweden’s 5G equipment market.  

And what of India, where the company has been growing its 4G network gear sales – is Ericsson gaining new business as Huawei gets squeezed in that giant market? “Without getting into geopolitics, there's a lot of speculation about that… But India is a very big market clearly, and a market where we have strengthened our position over the last few years… It is a major focus market because it can give us scale. So that is an important area where we prioritise growing our footprint,” stated Ekholm.

Japan is also proving fertile ground for Ericsson. “5G rollout has started but we think we have the big bulk ahead of us there. We see positive signs on the Japanese market… it is one of the front-running markets on 5G – we have to strengthen our position and take advantage of that,” noted the CEO.

The Networks division obviously dominates Ericsson’s business, accounting for about 73% of sales in the first quarter, but the company has high hopes for growing its emerging enterprise business, which it underpinned with the acquisition of Cradlepoint, which specializes in small cell/indoor 4G/5G wireless access tech, last year for $1.1 billion. (See Ericsson buys Cradlepoint in $1.1 billion deal)

“We see the growth opportunities now materialising in the numbers from Cradlepoint, so that's encouraging,” noted Ekholm, who, to close out the conference call, hinted at further acquisitions to bolster Ericsson’s position in enterprise networking. “The enterprise opportunity is still small in size, but we're starting to see a healthy growth rate… we will pursue both organic growth, as well as inorganic, opportunities,” the CEO teased.

- Ray Le Maistre, Editorial Director, TelecomTV